Ombudsman steps up pressure on LSB to sort out reserved legal activities

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2 August 2011

Sampson: we can't afford to take risks with the reputation of lawyers

The Legal Ombudsman is stepping up pressure on the Legal Services Board to sort out the current regulatory regime by commissioning research that will look at consumer confusion caused by reserved and unreserved legal activities, and how it could be exacerbated by alternative business structures.

In a tender document released last month, LeO said the traditional distinction between what is regulated and what is unregulated seems to be “increasingly difficult to negotiate, as are the lines of jurisdiction between legal and other services and their retrospective routes to redress”.

It added that while new business models and forms of legal services “may offer a wider range of legal products to customers, we are noticing that they are also causing a considerable amount of consumer confusion and uncertainty”.

The research will build on LeO’s recent warning that this confusion is leaving consumers unprotected; last week the board outlined its plans to rationalise the scope of regulation, including an examination of reserved activities.

Its goals are to map the available routes to redress for consumers of legal services; identify “the challenges, barriers and risks faced by customers of new legal business structures in seeking redress”; develop a greater understanding of the overlaps and gaps in jurisdiction for redress; and make recommendations to inform the development of a clearer and simpler structure for redress for consumers of legal services.

However, writing recently in the Guardian, chief ombudsman Adam Sampson suggested that ABSs are “likely to be a sideshow”, with the market – rather than legislation-inspired reform – likely to drive change.

He said: “Technological advances mean that legal knowledge can now be separated from the lawyer and systematised via modern software. Why go to a solicitor for a will when you can generate your own will by filling in an online form based on sophisticated legal algorithms? If more and more law can be packaged and sold online, what is the future of expensive and forbidding high street law firms?

“The second pressure comes from the market itself. Ten years ago, the boundaries between the professions were clear. Bankers banked, insurers insured, lawyers did law. Now those boundaries are much less distinct. Go onto the website of any major bank or insurance company and you will find them offering legal services alongside their core activities.

“We have grown used to the RAC offering to sort out the legal as well as the insurance aspects of the aftermath of our car accidents. RAC legal services offering crime, matrimonial and immigration law to customers of Barclays bank is a more novel departure.”

He said that while these developments are likely to make law cheaper and more accessible, professional standards and access to redress are vital. “And with the reputation of bankers and journalists shredded by apparent failures in regulation, we cannot afford to take similar risks with the reputation of lawyers.”

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